Question

Miller Company’s contribution format income statement for the most recent month is shown below:

	Total			Per Unit
Sales (43,000 units)	$	215,000		$	5.00
Variable expenses		86,000			2.00
Contribution margin		129,000		$	3.00
Fixed expenses		45,000
Net operating income	$	84,000

Required:

(Consider each case independently):

1. What is the revised net operating income if unit sales increase by 18%?

2. What is the revised net operating income if the selling price decreases by $1.10 per unit and the number of units sold increases by 17%?

3. What is the revised net operating income if the selling price increases by $1.10 per unit, fixed expenses increase by $10,000, and the number of units sold decreases by 3%?

4. What is the revised net operating income if the selling price per unit increases by 20%, variable expenses increase by 40 cents per unit, and the number of units sold decreases by 8%?

Answer 1